High-growth and high-P/E American stocks have owned the dance floor for the last 15 months. The low-P/E domestic and foreign stocks have been the gawky wallflowers, swaying to the music, sipping their fruit punch and waiting for their turn.

It was a good run. High-P/E U.S. stocks guzzled one cosmopolitan after another from the performance-enhancing punch bowl, and danced all night, every night. The S&P was up 26% last year, even when the Fed was playing a new song called Fiscal Cliff.

No one seemed to care. Not really. They just said “New song? Turn it up!” And kept dancing.

Now the music is over, and it is time to pay the piper. The stimulus has run dry. Former leaders are in a hangover. Foreign stocks and low-P/E American stocks have taken their place, fresh and ready to groove to the new tune, Not the high-P/E and growth that moved so many investors over the last year and a half. Now low-P/E and value stocks here, and all over the world are rising to the top of the hit parade.

Retail investors do not call the tune. We just dance to it. Think of the Fidelities of the world and the other major institutions moving billions of dollars around. They make up 70%-80% of the market on a daily basis. You and I are chump change.

They do not broadcast the innermost secrets to the rest of us. They do not have to: Their moves are transparent anyway if you watch charts and rankings like I do on a daily basis.

What they are telling us now is that there is new leadership in this market. The biotechs, pharmaceuticals and high techs are taking a rest. For how long? Who knows? It could be years until the next cycle comes around.

I dumped these sectors several weeks ago, after going steady with them over the last 15 months. Now I am dancing with some old friends again. Old friends that I have not seen in a several years. I don't currently see money leaving the market, I just see it rotating around like a good square dance.

Low-P/E U.S. stocks and the poor beleaguered emerging markets are where the money is heading now. You can follow it, or you can stick around and get sick on stale punch and bloated sectors.

High-P/E Internet, biotech, social media and pharmaceuticals are out and low-P/E all over the world is where the big investors want to dance for now.

One such example is a stock that I bought recently. I added Western Digital
WDC, -0.15%
to my Conservative accounts.

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I consider it suitable for conservative investors, because it is a large cap ($21 billion), and it pays a dividend yield of 1.3%. Given my druthers, I would rather own a bunch of good dividend-paying stocks with upside potential like this, rather than those bonds that are so vulnerable to rising rates down the road.

I got out of bonds about a two years ago. I wish I could tell you I was a genius, but it mostly involved staying awake during the first week of Econ 101. In a period of rising interest rates, be an owner, not a lender. If you did not notice, bonds got whacked in 2013. So much for asset allocation.

While the U.S. stock market was up 29% last year, a 50/50 bond/stock mix was only up about 7%. Fortunately, I was concentrated in the former and not the latter.

Now we see some signs of life in the bond market for the first time in a long time. But if you do not mind, I'll sit this dance out, at least for a while. I'd rather find my income in other places, stocks that pay dividends, for example.

A stock like Western Digital. Lots of people recognize the name of this $21 billion market cap company out of Irvine, California.

Wait a minute, you wonder. Weren't we talking about foreign stocks? And isn't Western Digital out of Irvine. That's California. Not India.

You are correct, grasshopper. But please remember this: The beginning of wisdom is the definition of terms. So how do we define foreign?

Western Digital controls more than 40% of the world market for digital-storage devices. Hard drives. They sell them at the Apple store, in case you were wondering if they are any good or not.

So, no matter where their executives send their kids to school, this company is a player in the world economy. Selling and making their equipment throughout the globe. So, in that sense, it is a foreign stock.

Western Digital manufactures hard disc drives for desktop and notebook computers. The big buzz word for some of their products is personal cloud: Lots of people back up their home and business network of pictures, movies, iPads, smart phones, desktops, laptops and whatever else using Western Digital products.

I bought one last year that contained a terabyte of memory. This year, I can get double the memory for about the same price. That's what my Apple genius told me, anyway. And you know those guys and girls are never wrong.

Company

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